DEPARTMENT OF AGRICULTURAL EXTENSION UNIVERSITY OF AGRICULTURAL SCIENCES GKVK, BANGALORE-560065 Name : Gopala, Y.M Date: 28/12/2013 ID.No.

: PALB-1028 Time: 9.30 A.M Class : III Ph.D (Ext.) Venue: Seminar Hall Seminar-III on Cooperative and Contract Farming In India Synopsis Agriculture is the mainstay for a large part of the rural population in India. About 84 per cent of the farmers in the country are small and marginal farmers, who have low risk bearing capacity and have poor linkages with markets restricting their participation in fast changing dynamic markets. Promoting more rapid and broad-based agricultural growth for medium to longer term will be extremely important not only for achieving higher economic growth but also for alleviating poverty in rural areas. Among the many factors contributed for decline in the economy of the farmers are: lack of assured market and remunerative price for their produce, lack of credit facilities, untimely supply of agricultural inputs and lack of information support system. The fragmentation of land and unorganized farming sector has further contributed for the declined economy. A well planned and judicious use of cooperative and contract farming could lead to economic cultivation. This situation can be created by introducing cooperative farming which would ensure consolidation of land holdings and expansion of production. The contract farming on the other hand provides assured market and assured price. In this back drop, the present seminar has been conceptualized with the following objectives: 1. To understand the concepts of cooperative and contract farming 2. To know the advantages and challenges of cooperative and contract farming in India 3. To review the case studies related to cooperative farming in India 4. To review the research studies related to contract farming in India Concept of cooperative farming and contract farming The term Co-operative Farming is often used as a farm management in which land is jointly cultivated. In other words, application of the principles of co-operation in the cultivation of land is called co-operative farming (Schiller Otto, 1973). Contract farming is an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices (Singh, 2006). Advantages and challenges of cooperative and contract farming in India The cooperative farming was introduced in India during 1944 through Bombay plan. Economic programmes committee of 1949 headed by Sri Jawaharlal Nehru, recommended pilot scheme of cooperative farming for small and marginal farmers. Presently the cooperative collective farming is widely practiced in Maharashtra, Tamil Nadu and Andhra Pradesh The advantages of cooperative farming are: (a) serves as an instrument for planning, (b) development of democratic spirit, (c) reduces the cost of production, (d) increases agriculture production, (e) achieves the economies of scale, (f) accessibility of services and technology. The challenges of cooperative farming are: (a) neglect of human and animal labor, (b) impracticability of cooperative farming in India, (c) lack of trained person, (d) persons looses individual liberty, (e) increase in managerial and administrative expenses (Chandy, 2001). Contract farming has its historical roots during the time when the Europeans first introduced indigo and opium cultivation in the Bengal Region under the East India company rule. ITCs contracts with the farmers of Andhra Pradesh for growing Virginia tobacco during the 1920s, emergence of seed companies during the 1960s, the green revolution during the 1970s and finally the tomato farming contracts by Pepsico in Punjab during the 1990s can be quoted as some of the milestones in the

emergence of contract farming in India. The advantages of contract farming include (a) provision of inputs and production services, (b) access to credit, (c) introduction of appropriate technology, (d) skill transfer, (e) guaranteed and fixed pricing structures, and (f) access to reliable markets. The challenges of contract farming are the diversion of input materials to other uses and the default of the farmer, ill effects of technology disseminated, monopsony in that locality by the company, Farmers generally bear most of the risk and there is also a scope for corruption and manipulation of quotas and quality specifications (Singh, 2007). Case studies on cooperative farming 1. Cooperative Nature Farming by unemployed youth: The Adarsh Yuvak Swayamrojgar Sewa Sahakari Sanstha was registered as a cooperative during August 2007 in Maharashtra. The youth decided to form a cooperative that would take up farming. The Sanstha took a seven-acre plot on lease from a relative of one of the members, for an annual rent of Rs 14,000. The first crop sown was sunflower. The per-acre input cost has worked out to around Rs 2,500, and the per-acre return was Rs 5,000-Rs 7,000 (Anonymous, 2010). 2. Co-operative Farming of Organic Paddy in Trissur: Around 2,400 small farmers in Thrissur of Kerala state are carrying out organic paddy cultivation within a cooperative framework, with the support from the Adat Farmers Cooperative Bank (AFCB). Members pool in their holdings, jointly cultivate the land using improved practices, and receive wages for their daily labour. The total cost of cultivation in 2006 was Rs 2.10 crore, gross returns were Rs 5.10 crore. The remaining Rs 3 crore was distributed among the farmers, proportionate to their landholdings and the labour contributed (Anonymous, 2010). Research studies related to contract farming Sharma (2008) reported that the contract farming has a positive impact on crop productivity and farm income. Per hectare productivity of basmati rice under contract farming showed an increase of about 19 per cent followed by non-basmati rice (ten per cent increase). Access to assured market was the most opted reason with 76 per cent respondents and assured price (67%) was the other reason. Mallika (2009) reported that there was maximum per cent of increase in economic status of farmers from Hassan (12.12%), Tumkur (14.85%), Kolar (29.13%) and Koppal (18.34%) districts, respectively after adopting the contract farming in their fields. Benefit-cost ratio of the four districts viz., Hassan (3.05), Tumkur (2.37), Kolar (2.76) and Koppal (6.18) gave positive signs towards the improvement of farmers economic status. Majority of the respondents faced financial and situational constraints rather than technological and extension constraints. Conclusion The main problem in Indian agriculture is not merely the application of new technology it is the lack of units of economic size and the assured market for the produce for agricultural commodities. Hence, the better alternative for fragmentation and assured markets are cooperative farming and contract faming, respectively. Reference
ANONYMOUS, 2010, Case studies on co-operative farming, Vikas Sahyog Pratishthan, Goregaon, Mumbai. Published on www.empowerpoor.org, accessed on 15/12/2013. CHANDY, K.T. 2001, Future of farming in India: contract or cooperative farming, Indian Social Institute, New Delhi. MALLIKA METI, 2009, Impact of contract farming on economic status of farmers in selected districts of Karnataka. M.Sc. (Agri.) Thesis (Unpub.), Univ. Agril. Sci., Bangalore. SCHILLER OTTO, 1973, Co-operative Farming and Individual Farming on Co-operative Lines, P.378. In: Memoria, C.B., Saksena R.D. (Eds.) Co-operation in India, Kitab Mahal, Allahabad, India. SHARMA, V.P., 2008, Indias Agrarian Crisis and Corporate-Led Contract Farming: Socio-economic Implications for Smallholder Producers. International Food and Agribusiness Management Review, 11(4): 25-48. SINGH, S., 2006, Corporate Farming in India: Is it Must for Agricultural Development?, W.P. No.2006-11-06, IIM Ahmedabad.